The costs you list do have something in common: they're 99+% the same whether the seat gets filled or not. The marginal cost of an extra body and their baggage across the Atlantic is low-/mid-three figure dollars (that's basically what airlines sell/barter partner one-way J awards to each other for... this accounting of having the FF programs buy awards at not much more the marginal cost also creates the fictional facts/factual fictions about the relative profitability of the metal tubes business vs. the bank customer acquisition business (the God's honest truth: it ain't that simple)).

I mean, they could always just throw those miles out for the purposes of future LT status bumps or set up two charts (one with those miles, one without) going forward?

[Or, given everything else, just admit that big CC spenders make more for them and count the miles at some reduced rate going forward?]

AA is also conveniently closing the loophole for duplicate/fictitious hold bookings by requiring AAdvantage account/number for 24 hour holds.

when viewed individually and in a vacuum, you might be correct, but if award seats were eliminated tomorrow, airlines could fly less flights, burn less fuel, do less maintenance, have less staff manhours, etc. american's miles outstanding are worth billions.

Is this speculation, or fact?

possibly a bit of both. Only AAdvantage members will be able to use 24 hour holds in the near future. The speculative part is that they�ll likely enforce that by requiring the member to login (which will populate their member number in reservations). By design and from experience, AA will prevent identical reservations for the same
AAdvantage number.

AA hasn't prevented duplicate bookings since before covid, AAdvantage numbers in the reservation or not.

What will happen is if you have duplicate reservation on hold then one (or possibly both) has always been subject to cancellation when the system does overnight sweeps.

So requiring an AA# on the reservation in order to put it on hold isn't going to change anything in this regard.

The "book value" of an SWU has nothing to do with the real value of an SWU. People will value each of these awards very differently. I couldn't imagine picking anything other than SWUs, but I get a lot of value out of them--certainly more than $125 (half of trip credit) / 15k miles (half of miles credit) worth. I can see how others wouldn't though. And that is why it's nice AA offers choices.

Agree with all of this. You also have to keep in mind that AA doesn't value miles based entirely on what well-informed, value-minded flyertalk members redeem miles for. They value the miles in the aggregate, taking into account how everyone redeems their miles. Most people don't redeem wisely, and that means the overall liability of miles is much less than that of a cherrypicked scenario when someone redeems a one-way in J to Europe or Asia for under 100,000 miles (which--at least from the west coast--takes work to find).

I 100% agree with you, I personally value SWUs around $500--I'd buy them at $100 all day long if I could. That being said, I was responding to someone who IIRC said SWUs cost AA nothing, and I wanted to let them know that they do in fact have a book value to AA.

I think the general point is that while there's a book value, it's not "nothing" but also not "substantial" in the sense that it seemed was implied.

I'm not even convinced that they have book value to AA in the true accounting sense of the word. Just because there may be a transfer pricing mechanism to apply $100 to a segment on which a SWU is burned (i.e. charge AAdvantage $100 and move it to the JFK-LHR flight) this doesn't mean that there's any impact on AA's external profitability. This is different of course than award miles which do actually have accounting value and impact reported earnings.

Bottom line: moving $100 in funny money from one pocket to another via transfer pricing wouldn't impact AA's cash flow.

As for what I would pay for an SWU? Different question entirely. Depends on one's willingness to travel in Y. If one is completely unwilling to fly in Y, then an SWU only has value to the passenger if it can be confirmed at time of booking.

Tell you what, I for one find tremendous utility/value in SWUs and I do not care one iota whether they have any "cost" to AA.

Would 5-day award holds going away even be a big negative? Couldn't you just book an award and then cancel it within 5 days (or even later) with no penalty?

Apologies to the extent I made it seem like I disagreed with you. I don't, and I didn't mean to imply that there was no book value / "cost" to AA for SWUs. As just a general matter, AA's financial statements suggest liabilities of over $3 billion for the AAdvantage program (with just over 9 billion miles in circulation), so they're definitely not treating these types of elite benefits as giveaways either.

Not if you don't have the miles yet. It's less of an issue with AA since there aren't many transfer partners, but there are situations where it could be useful (e.g., Marriott transfers).